Gold to retain glittery run, soyoil seen bearish

WEEKLY COMMODITIES OUTLOOK

Soyoil: Current price levels can be seen as the bottom for the season, said market players. Soybean arrivals have peaked with over 65 per cent of the bean crop from Madhya Pradesh having entered mandis, said traders. Daily arrivals (across the country), last week were down to 4 lakh bags of 90 kilograms each from 5 lakh bags in the earlier week.

"Crushing margins, which were negative to neutral owing to lower meal prices, are seen improving now. Poultry margins are wafer-thin with industry stocking soymeal at current prices (seen as the season's bottom)," said Govindbhai, an Indore-based soy complex trader.

Also, any further downward movement of prices will be restricted as farmers cut supplies owing to falling prices of soy complex.

"NCDEX January soyoil is expected to trade in Rs 350-360 (per 10 kilograms) range in the short term," said a Refco daily note. Overseas, however, soyoil is seen as the weakest leg of the complex, following the current oversupply scenario.

"No new fundamental development in soyoil, the high oil-yield content, the higher-than-estimated actual (US) Census October stock report, the unchanged year-on-year non-edible usage, and weakness in Malaysian palm oil indicate that soyoil will remain bearish," added Refco.

Gold: Profit-booking of highly overbought yellow metal is likely as the price moves towards $510 an ounce. Contrary to market expectations, fund buying continued beyond the psychological $500 an ounce, with gold fundamentals seen strongly bullish.

Fund buying has made the overall outlook quite positive, despite fears of year end liquidation overseas.

According to a Barclays, the short term target is "onwards and upwards for gold; key support was untroubled and gold remains on course to test higher levels still with $510 the next target to aim for."

Overseas spot gold today touched a new 23-year high of $508.25 an ounce in Asian trading and then saw profit-booking. Gold had touched $509.20 an ounce in February 1983 after an all-time high of $850 in January 1980.

MCX December gold rose to Rs 7,770 per 10 grams in tandem with overseas high and rupee weakening to a new 15-year low against the greenback at 46.28.

The fundamentals keeping gold bullish are overseas speculative fund buying, strongly supported by inflation concerns, talk of overseas central banks being keen raise their gold reserves and rise in crude oil prices with the onset of winter.

Though fundamentals appear bullish, the yellow metal is at present, overbought.

Further, Asian markets, especially India, are sitting on huge pile of unsold gold stock. In India, festive season gold sales have been lower by about 40 per cent on year.

Also, domestic offtake was sluggish as prices remained high and also the weakening rupee made gold imports country slightly expensive.